Maintenance and consistent application

Date recorded:

Cover paper (Agenda Paper 12)

At this meeting, the IASB discussed targeted improvements to IAS 37, IFRS Interpretations Committee (IFRS IC) agenda decision and the latest edition of IFRIC Update.

Provisions—Targeted Improvements—Discount rates—non-performance risks (Agenda Paper 12A)

The IASB has on its work plan a project to make three targeted improvements to IAS 37. One improvement relates to the discount rate an entity applies in measuring a provision. The IASB will consider developing proposals to specify in IAS 37 whether that rate should reflect ‘non-performance risk’—the risk that the entity will not fulfil its obligation. The staff are gathering information to help the IASB reach a tentative decision on this question at a future meeting.

This paper presented the information the staff have gathered to date, along with a preliminary staff analysis of factors that could affect the IASB’s decision. The IASB was invited to ask questions and raise comments, including on what, if any, further information the IASB needs to reach a tentative decision at a future meeting and the completeness of the staff analysis—whether there are other factors the IASB should consider in reaching its decision.

IASB discussion

IASB members noted that the IASB would need to get clarity as to what exactly users are asking of the IASB with regard to reflecting non-performance risk. One IASB member said it should be clear whether it was actually non-performance risk, or whether it was credit risk or even own credit risk they ask for. These may not be identical in all cases.

There was also some discussion around whether convergence with US GAAP should be an objective for this project, however one IASB member said that US GAAP has a fragmented approach with regard to accounting for liabilities and therefore convergence was difficult or even impossible to achieve.

One IASB member said that the way in which the liability is settled should play a role in determining the accounting treatment. It was also mentioned that inflation could play a role.

No decisions were made.

Multi-currency Groups of Insurance Contracts (IFRS 17 and IAS 21)—Finalisation of agenda decision (Agenda Paper 12B)

At its September 2022 meeting, the IFRS IC decided not to add a standard-setting project to the work plan in response to a request on IFRS 17 and IAS 21. The Committee instead decided to publish an agenda decision. The purpose of this meeting was to ask IASB members whether they object to the agenda decision.

IASB decision

There was no discussion on this paper. None of the IASB members objected to finalising the agenda decision.

Special Purpose Acquisition Companies (SPAC)—Accounting for Warrants at Acquisition—Finalisation of agenda decision (Agenda Paper 12C)

At its September 2022 meeting, the IFRS IC decided not to add a standard-setting project to the work plan in response to a request about how an entity accounts for warrants on acquiring a special purpose acquisition company (SPAC). The Committee instead decided to publish an agenda decision. The purpose of this meeting was to ask IASB members whether they object to the agenda decision.

IASB discussion

It was noted that the agenda decision is fact pattern-specific, i.e. changing the fact pattern may change the accounting outcome. One IASB member asked how this agenda decision interacts with a previous agenda decision on a similar (but different) fact pattern and whether it would be helpful to include a cross-reference in this agenda decision or to withdraw the old agenda decision. The staff replied that the IFRS IC discussed this but decided not to add any cross-references between the agenda decisions. Also, in general, agenda decisions stand as published at the time unless the underlying requirements change. In that case agenda decisions are withdrawn, and the Bound Volume would only include the agenda decisions that are applicable at the time the Bound Volume is published. However, this is not the case here.

IASB decision

No IASB members objected to finalising the agenda decision.

Lessor Forgiveness of Lease Payments (IFRS 9 and IFRS 16)—Finalisation of agenda decision (Agenda Paper 12D)

At its September 2022 meeting, the IFRS IC decided not to add a standard-setting project to the work plan in response to a request on Lessor Forgiveness of Lease Payments (IFRS 9 and IFRS 16). The Committee instead decided to publish an agenda decision. The purpose of this meeting was to ask IASB members whether they object to the agenda decision.

IASB discussion

One IASB member reminded the staff that this agenda decision should be considered during the PIR of the IFRS 9 impairment requirements. Another IASB member noted that four IFRS IC members voted against finalising the agenda decision and asked what their reasons were. The staff replied that these IFRS IC members all had different reasons for not supporting the agenda decision. For example, one IFRS IC member voted against finalising the agenda decision as it does not specify any presentation requirements. That IFRS IC member did not otherwise object to the agenda decision.

IASB decision

No IASB members objected to finalising the agenda decision.

IFRIC Update September 2022 (Agenda Paper 12E)

This agenda paper reproduces the IFRIC Update for September 2022.

There was no discussion of this paper.

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